For the first time in nearly five years, consumers seem to be spending more. The amount of credit card debt being accumulated by consumer around the country and in Florida has risen by an estimated 0.6 percent. This may not seem like much, but it could have implications as to the state of the economy.
What experts are unsure of is whether this is indicative of an overall improvement in the economy, or just people spending more on their credit cards. There have also been increases in student loans and in auto loans. The one major area of spending where there hasn’t been an increase is in home loans. This includes first-time borrowers and installment loans and revolving lines of credit secured by home equity.
Trends indicate that consumers are reducing their debt for everything but auto and student loans. This is being done through both positive and negative means. According to Equifax, one of the big three consumer credit reporting agencies, an increasing number of people are paying off their credit obligations. However, there are also people eliminating their debt through bankruptcy and foreclosure.
For some people to truly believe the economy is on the mend, people will need to be spending more money and using their credit cards more. However, it seems that there could be a “new normal” developing where consumers are no longer spending without thinking and living above their means. Theoretically, this may not bode well for investors and the stock market, but it could be encouraging to consumers that are looking to get rid of their credit card debt. Some Florida consumers may achieve debt freedom through filing bankruptcy. Having a fresh start financially may be just what many consumers need.
Source: slant.investorplace.com, Credit Card Debt Rises for First Time in 5 Years, No author, Aug. 30, 2013